Correlation Between Alton Sports and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Alton Sports and BGF Retail at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alton Sports and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and BGF Retail Co, you can compare the effects of market volatilities on Alton Sports and BGF Retail and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alton Sports with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and BGF Retail.
Diversification Opportunities for Alton Sports and BGF Retail
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alton and BGF is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Alton Sports is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alton Sports CoLtd are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Alton Sports i.e., Alton Sports and BGF Retail go up and down completely randomly.
Pair Corralation between Alton Sports and BGF Retail
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to generate 1.08 times more return on investment than BGF Retail. However, Alton Sports is 1.08 times more volatile than BGF Retail Co. It trades about 0.06 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.02 per unit of risk. If you would invest 142,400 in Alton Sports CoLtd on December 2, 2024 and sell it today you would earn a total of 7,400 from holding Alton Sports CoLtd or generate 5.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alton Sports CoLtd vs. BGF Retail Co
Performance |
Timeline |
Alton Sports CoLtd |
BGF Retail |
Alton Sports and BGF Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alton Sports and BGF Retail
The main advantage of trading using opposite Alton Sports and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports position performs unexpectedly, BGF Retail can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BGF Retail will offset losses from the drop in BGF Retail's long position.Alton Sports vs. Hyundai Industrial Co | Alton Sports vs. Jinro Distillers Co | Alton Sports vs. Handok Clean Tech | Alton Sports vs. Industrial Bank |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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